China’s national identity cards contain a box requiring citizens to designate their ethnicity. Citizens are required to carry these cards at all times, and many analysts feel the practice inadvertently enhances ethnic divisions. “It’s a very bad system [which] strengthens the differences between ethnic groups,” says international-affairs expert Prof. Yan Xuetong of Tsinghua University, ”We need to develop a common national identity, which we haven’t done very well yet.”

Many Chinese derive their sense of nationhood simply from being ethnic Chinese. Although authorities stress that China embraces 56 different ethnic groups, more than 91 percent of the country’s 1.3 billion people belong to the dominant Chinese, or “Han,” race. This makes it easy for the 1.2 billion members of the Han race to develop an “us” versus “them” mindset. Aspects of the language itself also reinforce this ethnocentrism. “China” is Zhongguo, or “Middle Kingdom,” and in centuries past emperors and peasants alike considered themselves to be at the center of the universe.

Thirty years ago, China was only just beginning to stir from its international isolation. During the 1960s, Beijing supported liberation movements in Southeast Asia and Africa, and helped built the Tanzania-Zambia railway, but ordinary citizens had little concrete interaction with foreigners. Now, however, the recent racism debate—which coincided with President Barack Obama’s state visit—has revealed China to be a vast but for the most part ethnically homogenous nation whose economic Great Leap Outward seems to have outstripped its social awareness toward other races and cultures.

Today, the Middle Kingdom truly is a magnet for tourists and traders from all over the world. The southern city of Guangzhou alone has a 100,000-member African community, a reflection of China’s growing economic ties with African nations. Bilateral trade hit $107 billion last year, and recently Premier Wen Jiabao pledged $10 billion in new low-interest loans to Africa.

Yet when Lou Jing became a finalist in the Go! Oriental Angel! TV talent show in late August, Chinese Netizens erupted with debate—some of it couched in crude or viciously racist terms—over her mixed-race origins. The startling intensity of the comments upset Lou, who had never experienced such vitriol before. Such public debates about race are rare; censors bar Chinese media from exploring this explosive topic in the context of domestic race relations, especially regarding the ethnic violence between Tibetans and Han in April 2008 and more recently between Muslim Uighurs and Han in the Central Asian region of Xinjiang.

Before Obama's visit, even when Chinese tried to sound positive or neutral about his race, they sometimes wound up being politically incorrect. During the U.S. presidential campaign, for example, one leading Chinese Web site touted “Black Kid Obama.” And on the eve of Obama’s landing in China, Foreign Ministry Spokesman Qin Gang said that the president, “as a black person,” should well understand Beijing’s position on the exiled Tibetan religious leader the Dalai Lama. The Chinese government considers the Dalai Lama to be a scheming separatist who presided over a feudal serf system before he fled from Tibet into exile. “China abolished serfdom in 1959,” Qin said, “this is the same as Lincoln’s abolition of the black slavery system in the U.S…President Obama should be more able to understand the stance of the Chinese government against Tibetan independence.”

But here’s another thing that many commentators missed: Obama is having a transformational effect on some Chinese who never thought they’d see a black man as president of the United States. Beijing has long characterized America as riven with racial prejudice. Last year’s Chinese government report on the U.S. human-rights record declared, “Black people and other minorities live at the bottom of American society.” So pervasive is Beijing’s perception of racism in the U.S. that many Chinese foreign-policy analysts ruled out the possibility that Obama could become president.

He obviously proved those skeptics wrong. Now some experts believe China could take a lesson from America’s multiculturalism. “We need to dilute our ethnic differences, like the U.S. did,” says Tsinghua’s Prof. Yan. It seems that Obama, just by being who he is, represents a potent riposte to some of the divisive and racist undercurrents in Chinese society. Even Lou Jing—who calls him her “idol” and learned to say “Yes we can” in English—has been heartened.